STOCKHOLDERS AGREEMENT
This Stockholders Agreement is made and entered into
as of May 20, 1997 by and among Xxxx X. Xxxxx, an individual
("XXXXX"); Xxxxx Xxxxxx, an individual ("XXXXXX"), on behalf of
himself and his Affiliates (as defined below) (including,
without limitation, Arrow Holdings, LLC, BDTV, Inc. and BDTV
II, Inc.); and Liberty Media Corporation, a Delaware
corporation ("LIBERTY"), on behalf of itself and its Affiliates
(including, without limitation, Liberty HSN, Inc.).
WHEREAS, pursuant to a Stock Exchange Agreement,
dated May 20, 1997, between Xxxxx and HSN, Inc., a Delaware
corporation (the "COMPANY") (the "EXCHANGE AGREEMENT"), Xxxxx
will acquire shares of HSNi Common Stock, as defined below;
WHEREAS, Xxxxxx and Liberty and their respective
Affiliates collectively have "beneficial ownership" (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) of an aggregate number of shares of
HSNi Common Stock and HSNi Class B Common Stock, as defined
below, which represent over 50% of the total voting power of
the outstanding Voting Stock of the Company; and
WHEREAS, Xxxxx, Xxxxxx and Liberty desire to enter
into this Agreement to set forth their respective rights and
obligations with respect to certain matters relating to their
shares of Common Stock (as defined below).
NOW, THEREFORE, in consideration of the mutual
agreements contained herein, the parties hereto agree as
follows:
Section 1. Definitions. As used in this Agreement,
the following terms shall have the following meanings:
"Affiliate" of a specified person shall mean any
other person directly or indirectly controlling or controlled
by or under direct common control with such specified person.
For purposes of this definition, "control," when used with
respect to any person, means the power to direct the management
and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise.
"Board of Directors" shall mean the Board of
Directors of the Company.
"Common Stock" shall mean and include, without
limitation, (i) the HSNi Common Stock; (ii) the HSNi Class B
Common Stock; (iii) any security or other instrument (A)
received as a dividend on, or other payment made to holder of,
the Common Stock (or any security or other instrument referred
to in this definition); (B) issued in connection with a split
of the Common Stock (or any security or other instrument
referred to in this definition) or as a result of any exchange
or reclassification of the Common Stock (or any security or
other instrument referred to in this definition)
or (C) issued as a result of any consolidation, merger or other
event which results in the conversion or exchange of the Common
Stock (or any security or other instrument referred to in this
definition); and (iv) any option, warrant or right to acquire
the Common Stock (or any security or other instrument referred
to in this definition).
"HSNi Common Stock" shall mean common stock, par
value $.01 per share of the Company.
"HSNi Class B Common Stock" shall mean Class B common
stock, par value $.01 per share of the Company.
"Permitted Transferee" shall mean, with respect to
Xxxxx, (i) an Affiliate of Xxxxx in which Xxxxx is the sole
equity owner, (ii) Xxxxx'x spouse, parents, members of his
immediate family or his lineal descendants or to a trust the
beneficiary of which is any of such persons, (iii) any of
Xxxxx'x executors, administrators, testamentary trustees,
legatees or beneficiaries named by will or by the laws of
intestate succession or (iv) any investment fund, investment
account or investment entity whose investment manager,
investment advisor, general partner or managing member is Xxxxx
or a Permitted Transferee of Xxxxx and such manager, advisor,
partner or member has sole voting power with respect to the
HSNi Common Stock so transferred by Xxxxx.
"Person" or "person" shall mean an individual,
trustee, corporation, partnership, limited liability company,
joint stock company, trust, unincorporated association, union,
business association, firm or other entity.
"Voting Stock" shall mean all capital stock of the
Company that by its terms may be voted on all matters submitted
to the stockholders of the Company generally.
Section 2. Voting Agreement Relating to Election of
Directors.
At all times after the date of this Agreement, (i)
Xxxxx shall be entitled to nominate Xxxxx (or a designee of his
acceptable to the Company) in each election of the Company's
directors or, if the Company shall have a staggered Board of
Directors, in each election in which Xxxxx or his designee
would stand for re-election upon the expiration of his or her
term as a director of the Company, (ii) each of Xxxxxx and
Liberty agrees, and agrees to cause each of his or its
respective Affiliates, to vote all shares of Voting Stock over
which he or it may then exercise voting power, at any annual or
special meeting of stockholders of the Company called for the
purpose of the election of directors or to execute written
consents of stockholders without a meeting with respect to the
election of directors, in favor of Xxxxx or his designee (or,
if necessary, to cause his or its designee or designees on the
Board of Directors of the Company, if any, to vote in favor of
the election of Xxxxx or his designee) and (iii) each of Xxxxxx
and Liberty shall, and shall cause his or its respective
Affiliates to, take whatever other action is reasonably
necessary to ensure that the Board of Directors shall at all
times include Xxxxx or his designee as a member (including
voting all shares of Voting Stock over which he or it may the
exercise voting power to ensure that the
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Company's charter and bylaws do not at any time conflict with
the provisions of this Agreement), subject to applicable law.
Xxxxx or his designee shall not be removed except for cause or
with the consent of Xxxxx. Upon any such removal for cause or
with the consent of Xxxxx, Xxxxx shall have the right to
designate a replacement director.
Nothing in this Agreement shall be construed as
requiring that Xxxxx or his designee be counted as one of the
directors that Xxxxxx or Liberty would be entitled to designate
under the Stockholders Agreement dated as of August 24, 1995,
as amended, by and between Xxxxxx and Liberty following a
"Restructuring Transaction" or a "Change in Law" (as such terms
are defined in such Stockholders Agreement).
This Agreement shall terminate upon the disposition
by Xxxxx and his Permitted Transferees collectively, in one or
more transactions, to third parties (other than Permitted
Transferees) of one-third or more of the shares of HSNi Common
Stock (as adjusted for stock splits, stock dividends,
combinations, reorganizations and the like) acquired by Xxxxx
in the first closing of the Exchange Agreement; provided,
however, that this Agreement shall terminate earlier if Xxxxx
and his Permitted Transferees do not beneficially own at least
5% of the Company's outstanding equity securities (assuming for
this purpose that all Company equity securities issuable under
the Liberty Agreements (as defined in the Exchange Agreement)
are outstanding).
Section 3. Miscellaneous.
(a) Effective Time of this Agreement. This
Agreement shall become effective upon the first closing of the
Exchange Agreement. If the Exchange Agreement is terminated
for any reason, this Agreement shall also terminate.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN THE STATE OF DELAWARE.
(c) Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto.
(d) Amendments and Waivers. This Agreement may be
amended, waived or modified only with the written consent of
each of the parties hereto. Any amendment that shall be so
consented to shall be effective and binding on all of the
parties hereto.
(e) Specific Enforcement. Each of the parties
hereto acknowledges and agrees that (i) monetary damages would
be an inadequate remedy for a breach of any of the provisions
of this Agreement, (ii) the other parties shall therefore be
entitled to specific performance of its rights under this
Agreement and (iii) in the event of any action for specific
performance it shall waive the defense that a remedy at law
would be adequate.
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(f) Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where
any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable
attorneys' fees in addition to its cost and expense and any
other available remedy.
(g) Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable
best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction.
(h) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(i) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement, and is
intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes
all prior agreements and understandings among the parties with
respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Attorney-in-Fact
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Liberty Media Corporation,
a Delaware Corporation
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
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